When you ask people to name a successful alternative energy program that has saved oil and improved US energy security, chances are that ethanol will be near the top of their list. This week the Economist cites yet another study that shoots holes in the benefits of ethanol. (You may need a subscription to get this story.)
I'm always fascinated by this discussion, since I did my Master's thesis on the subject of ethanol in gasoline (a.k.a gasohol) over 20 years ago. My conclusion then has apparently held up pretty well: ethanol as a fuel is essentially just a farm subsidy program that actually makes our energy situation worse. After two decades worth of efficiency improvements and better technology, the picture has, if anything gotten worse, because scientists are doing a better job of analyzing all of the inputs that go into ethanol. The net result is that it apparently costs somewhere between 29% and 34% MORE in energy inputs than you get back in fuel.
Although there are avenues of R&D that might someday improve this dramatically, notably the fermentation of cellulosic biomass (e.g. non-crops), the vast majority of the ethanol that we are subsidizing today--and that nearly every Presidential candidate wants to subsidize more of in the future--is the crop-based, high-cost, low-efficiency variety.
There are essentially three arguments in favor of ethanol:
1. It saves energy.
2. It is good for the environment.
3. It reduces our imports of foreign oil and our improves our trade balance.
The first has been comprehensively demolished by more studies than I could cite on this page, the ones referenced by the Economist being only the latest to do so.
The second is, to the surprise of many, on equally shaky ground. The addition of ethanol is intended to reduce vehicle emissions of carbon monoxide by increasing the oxygen available in the combustion process. MTBE has been added for the same reason, but it is on its way out and being replaced by even more ethanol. Unfortunately, the science behind this only seems to apply to the oldest cars on the road. If you have a modern engine, it doesn't need oxygen in the fuel to complete combustion. This happens with the help of computer controls and better catalytic converters.
The final argument still has some validity. Although the current ethanol process is inherently energy inefficient, that doesn't mean that it uses more petroleum products than it displaces. The fertilizer input is derived from ammonia made from natural gas. The process heat for the distillation plant could come from a variety of sources, but it would typically be natural gas fired. The electricity for the plant, and for pumping the water used in irrigation comes chiefly from coal in the Midwestern states that produce the most ethanol. Finally, the diesel fuel used in cultivation and harvesting come from oil (unless it's biodiesel, another heavily subsidized fuel.)
Without doing detailed calculations, it appears that ethanol saves oil, but mostly at the expense of natural gas, which isn't exactly cheap or plentiful at the moment (see my comments last week on LNG.)
What all of this means is that ethanol requires high subsidies, provides dubious environmental and oil-saving benefits, and consumes energy, rather than saving it. Despite all of these shortcomings, it features prominently in the energy proposals of almost every major Presidential candidate, not to mention having been supported by every sitting President since Gerald Ford. It is a classic example of bad but well-intended energy policy--and some very effective lobbying--and it looks like we are stuck with it until the arrival of the hydrogen economy or something even more innovative.